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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Moyarget Developments Ltd v Rove Mathis & Ors [2006] ScotCS CSOH_145 (15 September 2006)
URL: http://www.bailii.org/scot/cases/ScotCS/2006/CSOH_145.html
Cite as: [2006] ScotCS CSOH_145, [2006] CSOH 145

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OUTER HOUSE, COURT OF SESSION

 

[2006] CSOH 145

 

CA158/04

 

 

 

 

 

 

 

 

 

 

 

OPINION OF LORD REED

 

in the cause

 

MOYARGET DEVELOPMENTS LIMITED

 

Pursuers;

 

against

 

MRS ROVE MATHIS AND OTHERS

 

Defenders:

 

 

ญญญญญญญญญญญญญญญญญ________________

 

 

 

Pursuers: Borland; MacRoberts

Defenders: Sandison; Brodies, WS

 

15 September 2006

 

Introduction

[1] In this action the pursuers, a company engaged in property development in the North of Scotland, seek payment of ฃ527,535.05 from the defenders in respect of work which they claim to have carried out on their behalf in connection with the proposed development of a site in Dingwall.

[2] The action was commenced in September 2004. The summons was adjusted in March, April and June 2005. As then formulated, the pursuers' claim proceeded on the basis that, although they carried out work on the instructions of the defenders, they did so while the parties conducted negotiations with a view to formalising their relationship. A draft contract was proposed, and various revisions were produced, but no final agreement was reached. In particular, the parties did not agree the remuneration which would be paid to the pursuers for the services which they provided. In these circumstances, the pursuers maintained that a contract was implied, in terms of which they were entitled to be remunerated on the basis of quantum meruit, or alternatively that they were entitled to payment on the basis of unjust enrichment.

[3] In answer, the defenders maintained that agreement had been reached at a meeting on 7 February 2002 as to the circumstances in which the pursuers would be entitled to be paid. They further maintained that those circumstances had not come to pass; and that the pursuers had in any event acted in breach of contract, entitling the defenders to terminate the pursuers' instructions, as they had done. The pursuers on the other hand maintained that, even if there was an agreement such as the defenders alleged, the defenders had acted in breach of the agreement by wrongfully terminating the pursuers' instructions before matters had progressed to the stage at which (but for the termination of their instructions) they would have become entitled to payment under the alleged agreement.

[4] In these circumstances, the parties agreed that it was appropriate to determine, as a preliminary issue, the question whether any agreement had been reached on or around 7 February 2002 as to the basis on which the pursuers might be remunerated for carrying out the work they were instructed to do in facilitating the development of the site, and, if so, what the terms of that agreement were.

[5] After hearing evidence, I issued an opinion on 20 October 2005 in which I arrived at the following conclusion:

"In these circumstances, I find that agreement was reached on or around 7 February 2002 between the pursuers on the one hand and the defenders on the other as to the basis upon which the pursuers might be remunerated for the carrying out of the work they were instructed to do in facilitating the development of the site at Chestnut Road/Tulloch Castle, Dingwall. The terms of that agreement were that the pursuers were to be paid a fee in the event that planning permission was granted for the development of the site as a consequence of the pursuers' submission of an application for such permission in accordance with the defenders' instructions. I appreciate that the foregoing terms require further elaboration in order to establish, in greater detail, what further terms were implied. Issues of that kind were not however explored in any detail in evidence or in submissions. It is sufficient at this stage to state the terms of the agreement in the general language in which the parties might themselves have expressed their understanding, at the time, of what had been agreed."

[6] The case was put out for a hearing on further procedure in the light of those findings. It was then agreed that certain of the pursuers' pleas-in-law (predicated on the absence of any agreement as to their remuneration) should be repelled, and that one of the defenders' pleas-in-law (challenging such of the pursuers' averments and pleas-in-law as were predicated on the absence of any such agreement) should be sustained.

[7] There then followed a process of amendment of the pleadings, initiated by the pursuers. A minute of amendment was lodged in December 2005 and adjusted in early March 2006. The defenders then gave written notice of their intention to seek a debate on the relevancy and specification of the pursuers' averments, focusing in particular on the pursuers' contention that the parties' agreement contained an implied term that the pursuers would have a continuing authority to act on behalf of the defenders following the submission of the planning application to the planning authority. The pursuers' minute of amendment was then further adjusted, in March and May 2006, to give greater specification in relation to that and other matters.

[8] At the conclusion of the amendment process a debate was fixed on the defenders' plea to the relevancy and specification of the pursuers' averments, the defenders having by then given notice of the points which they wished to argue. These related, first, to the pursuers' averments concerning the implied term; secondly, to the related question whether, if the pursuers had the continuing authority contended for, the defenders were under any obligation in relation to advice or proposals put forward by the pursuers after the submission of the planning application, and, if so, what obligation; and thirdly, to the related point that the pursuers' pleadings did not suggest that the defenders had failed to give the pursuers any instructions in relation to any matter pertaining to the application prior to its "deemed refusal", two months after its submission, or prior to the termination of the pursuers' authority. Following the fixing of the debate, the pursuers lodged a note of argument which reiterated the terms of their pleadings in relation to the implied term, and referred to some of the authorities discussed below.

 

The pursuers' case as pleaded

[9] In their pleadings as now amended, the pursuers aver that their director, Mr Duncan, was approached by the first defender's brother, Mr Haig, in November 2001 with a view to the pursuers' assisting in the development of the site, which was owned by the defenders. Mr Haig indicated that the first defender (Mrs Mathis) wished to explore the possibility of developing the site; and, to that end, wished to draw on the pursuers' expertise in development work. Mr Duncan investigated the potential for planning permission being granted in respect of the site, then met the first defender and her husband in January 2002 to discuss his initial views. A further meeting took place on 7 February 2002. In relation to that meeting, the pursuers aver:

"The meeting discussed the progress which Mr Duncan had made with his investigations... No agreement was reached as to the basis upon which development of the site would proceed. Mr Duncan was, however, instructed... to continue his work in progressing the development of the site."

[10] The pursuers' averments continue:

"Explained and averred that (as the court has held) the terms of the parties' agreement were that the pursuer was to be paid a fee in the event that planning permission was granted for the development as a consequence of the pursuer's submission of an application for such permission in accordance with the defenders' instructions. It was an implied term of the parties' agreement that the pursuer would have continuing authority to act on behalf of the defenders during the planning phase, i.e. up until the point at which the planning application was determined."

[11] The basis for the implication of that term is then stated:

"The said term requires to be implied in order to give the parties' agreement such business efficacy as they must have intended that it should have. The said term reflects the presumed intention of the parties. Its implication is necessary in order to produce the result that the parties to the agreement must have intended. Without the said term, the pursuer would have been unable to influence how the development was taken forward in the planning phase, and, in particular, would have had no influence, following the submission of the planning application, in relation to whether that application was ultimately granted by the planning authority. In that event the pursuer would have been unable to influence whether it might ultimately be paid its fee. Every reasonable man in the position of the pursuer would seek such a term for his own protection, and no reasonable man would refuse to accede to it."

The pursuers then go on to aver that the defenders acted in breach of that implied term, by terminating their authority to act by letter dated 6 July 2004.

[12] The pursuers later aver:

"As to the defenders' averments anent the deemed refusal of the planning application, following the submission of the application the pursuer advised Mr Haig that it had been 'called in' for review by the planning authority. Thereafter, the pursuer received no further instructions from Mr Haig or the first defender in relation to the application. Accordingly, esto the application lapsed, it did so for want of instructions from Mr Haig or the first defender in relation to the application."

As I understood the explanation of these averments given by counsel for the pursuers in the course of his submissions, by "called in" was meant a decision by the local planning authority that the application should be dealt with by staff at its offices in Inverness rather than by the local planning officer in Dingwall, and by "lapsed" was meant the deemed refusal of the application (for the purposes of any appeal) two months after its submission, by virtue of regulation 14(2) of the Town and County Planning (General Development Procedure) (Scotland) Order 1992 (SI 1992 No.224) and section 47(2) of the Town and Country Planning (Scotland) Act 1997. In relation to the latter point, it appears from the pursuers' averments that they submitted on application for detailed planning permission, with (they aver) the agreement of the defenders. Although the date on which it was submitted is not averred by the pursuers, it appears from the submissions at the debate that there is no dispute that the date was 8 April 2004, as averred by the defenders. The deemed refusal would therefore have occurred some weeks before the pursuers' instructions were withdrawn on 6 July 2004.

[13] The pursuers further aver:

"As regards the alleged difficulties with the planning application condescended upon by the defenders, one of the normal purposes of submitting such an application is to 'flush out' any issues which the planning authority might have in relation to a proposed development. The issues which had been discussed by the pursuer's Mr Duncan and the local planning officer, prior to the pursuer's authority to act in relation to the project being terminated, were not such as to indicate that there was a fundamental obstacle to the application being granted. Discussion of such issues with the local planning authority following the submission of a planning application is a perfectly normal part of the planning process."

[14] The pursuers go on to aver:

"Esto there was an agreement as condescended upon by the defenders [viz. the agreement which was found proved at the preliminary proof], the defenders acted in material breach of that contract by wrongfully terminating the pursuer's authority to act relative to the project, as aforesaid. As a result, on that hypothesis, the pursuer has sustained loss and damage. In those circumstances, but for the said breach the pursuer would have proceeded with the planning application; and planning permission would have been obtained."

[15] Finally, I note the pursuers' averments:

"With regard to the defenders' averments anent alleged repudiation of the agreement by the pursuer, it is explained and averred that there was no such repudiation. Indeed, the pursuer had performed its part of the bargain by submitting the planning application, as aforesaid" (emphasis added).

 

The submissions for the defenders
[16
] In seeking the dismissal of the action, counsel for the defenders submitted that the basis upon which the term in question was sought to be implied was that it was necessary to give business efficacy to the contract (as counsel for the pursuers confirmed). The criterion to justify an implication of that kind was necessity, not reasonableness: The Moorcock (1889) 14 PD 64; Liverpool City Council v Irwin [1977] AC 239; Scally v Southern Health Board [1992] 1 AC 294 at pages 306-307 per Lord Bridge of Harwich.

[17] One consequence of the criterion of necessity was that a term could not be implied where there were a number of different terms to which the parties might have agreed. Reference was made to the speech of Lord Pearson (with which Lord Guest, Lord Diplock and Lord Cross of Chelsea expressed agreement) in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601. The case concerned a building contract under which the work was to be done in three phases, with fixed dates for the completion of each phase. Phase III was to begin six months after the issue of the certificate of practical completion of phase I. In the event, a delay in the completion of phase I reduced the time available for the completion of phase III. The question was whether there was an implied term under which an extension of time was allowed.

[18] At first instance, Donaldson J held that no such term could be implied, citing a passage from the judgment of Scrutton LJ in Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592 at page 605:

"A term can only be implied if it is necessary in the business sense to give efficacy to the contract; that is, if it is such a term that it can confidently be said that if at the time the contract was being negotiated some one had said to the parties, 'What will happen in such a case', they would both have replied, 'Of course, so and so will happen; we did not trouble to say that; it is too clear'. Unless the court comes to some such conclusion as that, it ought not to imply a term which the parties themselves have not expressed."

Donaldson J applied that test to the facts of the case before him, stating, as quoted by Lord Pearson at page 606:

"When I come to imagine the answers of the parties if asked as they signed the contract, 'What happens about the time for completion of phase III, if completion of phase I is delayed?' I am quite unable to discern any certain answer."

[19] In the Court of Appeal, Cairns LJ cited another deservedly well-known dictum, from the opinion of Lord Wright in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at page 137:

"But it is well recognised that there may be cases where obviously some term must be implied if the intention of the parties is not to be defeated, some term of which it can be predicated that 'it goes without saying', some term not expressed but necessary to give to the transaction such business efficacy as the parties must have intended. This does not mean that the court can embark on a reconstruction of the agreement on equitable principles, or on a view of what the parties should, in the opinion of the court, reasonably have contemplated. The implication must arise inevitably to give effect to the intention of the parties."

Cairns LJ observed (as quoted by Lord Pearson at page 607):

"One reason why in my view it is impossible to imply the term contended for here is that I cannot find any means of determining, if the parties had considered there should be some extension in relation to phase III if phase I were not completed by the due date, what period of extension would have been agreed."

[20] In the House of Lords, Lord Pearson affirmed the correctness of a test of necessity, stating (at page 609):

"An unexpressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract: it is not enough for the court to find that such a term would have been adopted by the parties as reasonable men if it had been suggested to them: it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, though tacit, formed part of the contract which the parties made for themselves."

Since there were at least four possible extensions of time which the parties might have agreed, none of those possibilities was obviously what the parties must have intended, and therefore none could be implied.

[21] In the present case, counsel submitted, it was clear from the pursuers' averments that they had submitted an application for planning permission in accordance with the defenders' instructions. The pursuers sought to imply a term "that the pursuer would have continuing authority to act on behalf of the defenders" until the application was determined; but it could not be suggested that the mere existence of authority would have enabled the pursuers "to influence whether [they] might ultimately be paid [their] fee". The argument must be that the pursuers were entitled to exercise such authority - to do something - and that the defenders were obliged to allow them to do this. The pleadings offered no clue as to the nature of this authority. To do whatever the pursuers chose? To make proposals, subject to the defenders' veto? Or were the defenders bound not to seek to control the pursuers' exercise of their authority arbitrarily or capriciously? Or were the defenders bound to act as a reasonable person would act in the circumstances? For example, could the pursuers lodge an appeal, on behalf of the defenders, against the refusal or deemed refusal of planning permission? Suppose the planning authority wanted the density of the proposed housing to be reduced, with consequences for the profitability of the development: were the defenders obliged to acquiesce in whatever reduction in housing the pursuers were minded to agree to? What if the planning authority wished to negotiate an agreement to secure "planning gain"?

[22] The pursuers' pleadings were also wholly inspecific as to how they would have "proceeded with the planning application" - what they would have done, in the exercise of their authority - which would have resulted in the granting of planning permission. Moreover, their position in their pleadings was that "the pursuer had performed its part of the bargain by submitting the planning application": what was suggested was a power to act, in circumstances where the pursuers had already performed their contractual obligations. A further difficulty concerned the duration of the supposed authority: it did not apparently expire on the deemed refusal of the application (since that had occurred prior to the termination of the pursuers' authority).

[23] The pursuers' difficulties intensified when one considered the case law concerning contracts where an agent was engaged to attempt to obtain a beneficial result for his principal and was entitled to a fee only on the occurrence of that result. In Luxor (Eastbourne) Ltd v Cooper, for example, the agent was entitled to a fee if the property was sold by his principal to a purchaser whom the agent had introduced. The argument that there was an implied term that the principal would not, without reasonable cause, refuse to sell the property to a purchaser whom the principal had introduced was rejected, as not being necessary to give the contract the business effect which both parties must have intended it should have. Viscount Simon LC said, at pages 120-121:

"The agent is promised a reward in return for an event, and the event has not happened. He runs the risk of disappointment, but if he is not willing to run the risk he should introduce into the express terms of the contract the clause which protects him."

Lord Russell of Killowen distinguished (at page 128) contracts under which one party bound himself to do certain work, and the other bound himself to pay remuneration for the doing of it:

"As I have already indicated, the case under consideration is quite different from a contract by which an agent is employed and is by the contract of employment bound to do specified work for the principal... In such contracts a term must, if not expressed, necessarily be implied that the principal will do nothing to prevent the agent from doing the work which the contract binds him to do."

[24] In the present case, the pursuers did not suggest that they had an obligation to do anything after the planning application had been submitted: on the contrary, they averred that "the pursuer had performed its part of the bargain by submitting the planning application." The position was therefore analogous to that in the Luxor case, as analysed by Lord Wright at page 136: the pursuers had performed the services contracted for, but their right to payment was conditional on the occurrence of a future event: namely, the granting of the planning application. That condition was never fulfilled, so that the right to be paid never materialised. The position in the present case, once the planning application had been submitted, also fell within the scope of Lord Romer's analysis, at page 153:

"The respondent... was not employed to do anything at all, and would have committed no breach of his agreement with the appellants had he remained entirely inactive. There was no 'contract of agency'. If A and B agree that B shall do some work for A for reward, it is no doubt an implied condition of the agreement that A shall not prevent B from performing his part of the contract, i.e. doing the work and so earning his reward. But I can see no ground whatsoever for implying any such condition where B is under no contractual obligation to do the work... if B is under no obligation to do the work, why should A be under an implied obligation not to prevent him doing it?"

[25] Counsel also observed that the desire of the agent to be paid could not be elevated into a principal aim of the contract, capable of generating implied terms. Reference was made in that connection to the Luxor case at page 116, per Viscount Simon LC (quoting the judgment of Scrutton LJ in Trollope & Sons v Martyn Brothers [1934] 2 K.B. 436 at page 444), and to Marcan Shipping (London) Ltd v Polish Steamship Co (The "Manifest Lipkowy") [1989] 2 Ll. L.R. 138 at page 144 per Bingham LJ. Reference was also made to Mona Oil Equipment and Supply Co Ltd v Rhodesia Railways Ltd [1949] 2 All E.R.1014.

 

The submissions for the pursuers
[26
] In support of his motion that a proof before answer should be allowed on all remaining issues, counsel for the pursuers began by addressing the legal basis for the implication of a contractual term, under reference to The Moorcock, Scottish Power plc v Kvaerner Construction (Repairs) Ltd 1999 S.L.T. 721 and E & J Glasgow Ltd v UGC Estates Ltd [2005] CSOH 63. Particular emphasis was placed on an observation made by Lord Macfadyen in the Scottish Power case at page 725, in relation to the test of "business efficacy":

"In seeking to judge whether that test is satisfied, it will ordinarily be helpful to ask the question posed in William Morton & Co v Muir Brothers & Co 1907 SC 1211, namely whether the term is one which in the circumstances every reasonable man would seek for his own protection and no reasonable man would refuse to accede to."

Counsel relied on that observation as relaxing the criterion of necessity and introducing a test of reasonableness. It seems to me that that was not Lord Macfadyen's intention, and that his observation has to be read with care: the words "every" and "no" are important. It is not the law that, if the court finds that a term would have been adopted by the parties as reasonable men had it been suggested to them, that term is implied in their contract: that is made abundantly clear by the authorities cited earlier.

[27] In relation to the term sought to be implied in the present case - that "the pursuer would have continuing authority to act on behalf of the defenders ... up until the point at which the planning application was determined" - counsel said that that also imported a continuing obligation, on the part of the pursuers, to provide services with a view to the eventual determination of the planning application. The averment that "the pursuer had performed its part of the bargain by submitting the planning application" meant only that the pursuers had performed the obligations incumbent upon them up to that point: not that they had performed the whole of their obligations under the contract. The pursuers would, for example, be under a continuing obligation to attend meetings with the planning authority, to discuss matters with them, to report on those discussions to the defenders, "and so on". These obligations would continue until there had been an express determination of the application. The deemed refusal was not a "determination", within the meaning of the term sought to be implied. A deemed refusal had not been within the parties' contemplation at the time when the contract was made. The reference, in the implied term, to "the planning application" included amendments instructed by the defenders. The pursuers' continuing authority and obligations related to the possibility that the application might be revised. The pursuers would always require to act in accordance with the defenders' instructions. Any planning permission obtained had to be acceptable to the defenders, and any revisal of the application would require therefore to be in accordance with their instructions. Reference was made to Alpha Trading Ltd v Dunshaw-Patten Ltd [1981] Q.B. 290 at page 304 per Brandon LJ.

[28] Whether the parties' agreement contained the implied term in question was to be judged as at 7 February 2002, when the agreement was made. The factual background had been set out in the opinion issued following the preliminary proof. The defenders needed someone to assist them in obtaining planning permission. If Mrs Mathis had been asked whether the services to be performed by the pursuers were to continue after the submission of the planning application, insofar as issues might be raised by the planning authority which could be addressed by the revisal of the application, she would have agreed: no-one else was interested in doing the work. Counsel referred in that regard to paragraph 48 of the earlier opinion, where evidence given by Mr Haig was summarised. Equally, from the pursuers' perspective, without the implication of a term that they were to continue to provide services after the submission of the application, they would be unable to influence whether the application was granted, in the event that matters were to be raised which could be addressed by the revisal of the application.

[29] Counsel also referred to paragraph 63 of the earlier opinion, where I stated, in relation to the pursuers' Mr Duncan:

"By agreeing to provide services during the planning phase he would be in a position to influence decisions as to how the development was taken forward ..."

Counsel interpreted that as a finding that Mr Duncan would be in a position to affect or influence decisions as to whether planning permission was granted. I observe that, quite apart from any other difficulties involved in relying at this stage on observations in an opinion based on evidence heard at a preliminary proof, directed to a different issue from that with which the court is at present concerned, this submission in any event misinterprets what was said. That may be apparent if the statement in question is placed in its context:

"In return for deferring his fees, Mr Duncan would, by entering into such an agreement, be well placed to obtain an involvement in the construction of the development. It is clear from his own evidence that his desire to be involved in the construction phase was the motivation for responding to Mr Haig's invitation in the first place. He pursued that objective consistently thereafter, as the correspondence demonstrates. By agreeing to provide services during the planning phase he would be in a position to influence decisions as to how the development was taken forward, and might be awarded the contract to carry out the development."

In stating that Mr Duncan would "be in a position to influence decisions as to how the development was taken forward", I intended to convey that he would be able to influence decisions in relation to the future progress of the development once planning permission had been granted (for example, in relation to the construction of the development and the sale of the properties): in particular, in relation to the selection of the main contractor.

 

Response on behalf of the defenders

[30] Since little if any notice of the pursuers' argument appeared to me to have been given in either the pursuers' pleadings or the note of argument lodged in advance of the debate, I allowed counsel for the defenders an opportunity to respond. Counsel observed that the note of argument lodged by the defenders six weeks in advance of the present debate had given notice of the points to be made, and had afforded the pursuers an opportunity to seek to amend their pleadings in order to meet those points. Nevertheless, it had been in the course of the submissions on behalf of the pursuers that the court, and the defenders, had learned for the first time what their case was. In particular, there were two fundamental aspects of the pursuers' case as stated in submissions for which one would search their pleadings in vain: first, the suggestion that the implied term imposed a continuing obligation on the pursuers, after the submission of the application, to attend meetings, discuss matters with the planning authority, report to the defenders "and so on" (and not merely a power or authority for them to do so, which was the case pleaded), and that that obligation would continue until there was an actual as opposed to a deemed determination of the application; and secondly, the suggestion as to the defenders' role in this process, namely that they were not bound to act reasonably, or even not to act capriciously or arbitrarily in dealing with whatever the pursuers might propose in the post-submission phase, but were to be entitled to reject anything that was suggested to them, whatever time and expense had been put into providing the proposal, and however likely it was that the proposal, if agreed to by them, would secure the grant of planning permission on favourable terms. It was unsatisfactory for such fundamental contentions to be advanced for the first time in the course of debate: the relevancy and specification of the pursuers' averments depended on their pleadings, not on the different case argued orally.

[31] Moreover, it was illegitimate for reliance to be placed on observations or incidental findings made in the opinion issued after the preliminary proof, which had been concerned with a different issue: Noble v De Boer 2004 S.C. 548. The present issue was the adequacy of the pursuers' pleadings on record.

[32] In relation to the contention that the pursuers were under an obligation to continue to render advice and assistance to the defenders until the actual determination of the application, counsel asked why the existence of such a term was obviously necessary, to the extent that it "went without saying". Why should the pursuers not simply have an option to continue to act, rather than an obligation to do so, whatever circumstances might ensue? It was easy to see why it was now suggested that such an obligation existed: that would enable the pursuers to shelter under the "non-prevention of performance of an obligation" line of authority. It was less easy to see the commercial merit of the contention that the pursuers were to be obliged to continue to tender a full advice and assistance service to the defenders (or was it something else?), whatever circumstances might come to exist: circumstances which might radically alter the assessment of the likelihood of the planning application being granted. The lack of obvious commercial sense was particularly clear when one considered that the defenders, on the pursuers' argument, were free to dismiss out of hand any proposals which the pursuers might put forward. Why should the pursuers "inevitably" have bound themselves to tender advice and assistance which might be unwanted, and which the defenders could freely disregard? From the pursuers' perspective, a more obvious term would have been that they should have the option to continue to provide advice and assistance to the defenders as long as that appeared to them to be a sensible commercial proposition. That, however, was not the term contended for. Equally, although it was easy to see why it was now suggested that the defenders were not to be obliged to act reasonably in responding to the post-application advice tendered to them - namely, because a "reasonableness" term had been authoritatively held to be unworkable (Luxor) - from a commercial point of view the pursuers would at least have wished to stipulate that the defenders should not act arbitrarily or capriciously. No rationale had been advanced for the contention that the implied term required the continued provision of the pursuers' services until the actual determination of the application, as opposed to its deemed refusal.

[33] The implied term contended for would thus produce a situation where the pursuers were obliged to continue spending time and effort, however circumstances might change, until a date which neither party could control; and where the defenders were obliged to continue receiving advice and assistance, but were not obliged to do anything in response. That was not a commercially sensible result, let alone so obvious that it would go without saying. The term contended for went far beyond anything which had previously been accepted as an implied term in any case cited to the court. Such a term would only have been reached, if at all, after a process of negotiation between the parties: it could not have been regarded as so obviously implicit in the agreement as not to require any mention.

[34] In the light of the implied term now contended for, the pursuers' averments were irrelevant in respects not previously discussed. The averments that the pursuers received no instructions from the defenders after advising them that the application had been "called in" (i.e. was being dealt with in Inverness rather than Dingwall), and that the application "lapsed" (i.e. there was a deemed refusal) as a result of the defenders' failure to give some (unspecified) instructions, were obscure to the point of irrelevance, and incomprehensible if (as appeared to be the argument) the defenders were not obliged to take any positive action in relation to the application following its submission.

[35] Similarly, the averment that, but for the termination of the pursuers' authority, "the pursuer would have proceeded with the planning application, and planning permission would have been obtained" could now be seen to be not only wholly lacking in specification, but also irrelevant in a deeper sense. Nothing was said about how the pursuers' continuing authority would have brought about the grant of planning permission: nothing was said about the problems which would have been raised by the planning authority in relation to the application, or about the advice which the pursuers would have tendered to the defenders with a view to surmounting any such problems, or about what the defenders' response to such advice would have been. Since it was now contended by the pursuers that the defenders had a free hand to give or withhold instructions to or from the pursuers, the pursuers' case was perilled on their establishing that they would have been able to secure the defenders' agreement to whatever it was that they needed to do in order for planning permission to have been granted. Averments about these matters were crucial to the relevancy of the pursuers' case.

[36] In a brief response, counsel for the pursuers submitted that Noble v De Boer was distinguishable from the present case, partly because the present case involved a debate (rather than a proof) following a preliminary proof, and partly because in the present case the judge who had heard the preliminary proof was also the judge hearing the debate.

 

Discussion

[37] I have set out counsel's submissions in detail, as the case was well argued on both sides; and, in the light of the submissions, I can state my own reasons relatively briefly.

[38] In commercial proceedings, the court is not necessarily confined to a consideration of the parties' pleadings in deciding whether the requirements of relevancy and specification are satisfied: in some cases, there can be scope for adopting other means by which fair notice of a party's case can be given. In the present case, however, the pursuers' pleadings are the only formal statement of the pursuers' case before the court.

[39] The pursuer's averments contain no indication that it is contended that it was an implied term of the agreement between the parties that the pursuers' obligation to provide services to the defenders was to continue after the planning application had been submitted. The averment that "the pursuer would have continuing authority to act on behalf of the defenders ... up until the point at which the planning application was determined" does not suggest that the pursuers would have a continuing obligation to attend meetings with the planning authority, to discuss matters with them, to report on these discussions to the defenders, "and so on" (whatever that phrase might import). The averments that the pursuers were to be paid "in the event that permission was granted for the development as a consequence of the pursuers' submission of an application for such permission", and that "the pursuer had performed its part of the bargain by submitting the planning application" appear, at first sight, to imply that the pursuers' duties were fulfilled once the application was submitted, and that their entitlement to payment then depended on whether that application was granted.

[40] Furthermore, the pursuers' pleadings appear to me to provide no basis for the leading of evidence from which the court could conclude that the term contended for (and no other term) went without saying as part of the agreement made on about 7 February 2002; that it was an implication arising inevitably to give effect to the intention of the parties; that it was a term which, though tacit, formed part of the contract which the parties had made for themselves. In that connection, the contentions now made on behalf of the pursuers give rise to numerous difficulties, several of which were mentioned by counsel for the defenders. The pursuers' pleadings do not, for example, appear to me to lay a foundation for establishing that the pursuers were necessarily obliged to continue performing services after the submission of the application, rather than their services coming to an end once the application had been submitted. I am also struck by the contention that the pursuers' obligation to perform services was to continue indefinitely (and, in particular, notwithstanding the deemed refusal of the application), until the application was actually determined: something which would not necessarily happen unless there was an implied term that the defenders were obliged to make an application for judicial review in order to have the planning authority compelled to issue a determination, in the event that they failed to do so voluntarily, or alternatively an implied term that the defenders were obliged to appeal against a deemed refusal, in order to obtain a determination on appeal.

[41] Equally importantly, the pursuers' pleadings are entirely lacking in specification as to what would have happened, if their instructions had not been withdrawn, which would have resulted in the granting of planning permission. What were the difficulties which they would have addressed? What advice or proposals would they have given the defenders, or how would they have dealt with the planning authority, so as to overcome the difficulties? How would the defenders have responded to any such advice or proposals? For what, at the end of this process, would planning permission have been granted (i.e. the application as submitted, or a revised version), bearing in mind that the pursuers' claim is calculated by reference to the cost of the development? In the absence of any notice of the pursuers' position in respect of this essential part of their case, their averments must be regarded as irrelevant.

[42] It is an important objective of commercial procedure that cases should be dealt with expeditiously. I have narrated the history of the present case. It is apparent from that history that the court has been generous in allowing the pursuers time to plead a relevant case. The case has been before the court for two years. During that time, the pursuers have adjusted and amended their pleadings on numerous occasions. They have had every opportunity to address the points made in the present debate. No doubt advisedly, counsel for the pursuers did not, in the course of the debate, move for leave to make further amendments.

[43] In the circumstances, I shall sustain the defenders' preliminary plea, and dismiss the action.

[44] Finally, I note that the pursuers' pleadings, in respect of the background to the agreement reached on 7 February 2002, and the implied term said to have been included in that agreement, incorporate a letter from Mr Duncan to Mrs Mathis dated 25 January 2002, which states:

"The Planning Officers are prepared for us to submit our proposals for discussion and amendment, as a means of opening up a dialogue, without us having to submit any fee. However, once it is agreed what is acceptable to all, then the fees will be required to be paid on submission of the formal application."

The implication, quantum valeat, would appear to be that Mrs Mathis was being told at that time that discussion with the planning authority, and the "amendment" of proposals, was to precede the submission of the planning application: the application was to be submitted "once it is agreed what is acceptable to all". I mention this letter, since it forms part of the pursuers' pleadings; but I have attached no significance to it in arriving at my decision, since neither counsel referred to it in the course of the debate.

 

 


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